Dealing With Trade Wars and the Electronic Component Shortage

Why is there an electronic component shortage?

Global tech innovation boom

As innovation in technology continues, so does the demand for more sophisticated electronic devices. Smart technology is becoming ever more complex – from smart watches, to home assistants, to AI features. On top of this, existing smartphone technologies are constantly evolving, requiring more complex and intricate designs and a larger volume of electronic components.

Growing electric car industry

Electric cars are becoming increasingly popular, and 2019 is predicted to be the year that the industry booms. However, the automotive industry requires a large volume of electronic components for manufacture, and this high demand is contributing to a global shortage.

On top of this, there is currently a shortage of cobalt, used for batteries, because China has exercised a monopoly over the cobalt supply.

Tariffs on aluminium and steel

Last year, the US government placed trade tariffs on aluminium and steel. Since nearly every industry relies on electronic components for manufacturing, this has caused issues and concerns worldwide.

The trade war between the US and China

After the US government imposed trade tariffs on aluminium and steel, the Chinese government threatened to place duties on a range of US exports, including electronics. Since the electronics supply chain is global and interconnected, the ongoing trade war between the US and China continues to contribute to the global electronic component shortage.

Solutions for dealing with the electronic component shortage

Don’t panic buy

It can be tempting to stockpile or over-order in times of component shortage, but you shouldn’t do this without a plan in place. Supply chain management should be based on accurate data and forecasts rather than fear.

Look for a strategic supplier

A supplier who will buckle under pressure and only gives a reactionary response will not be useful to you when there’s a global electronic component shortage. We would always recommend partnering with a strategic supplier, one who is experienced, committed and who can plan for all eventualities.

Maintain a positive relationship with your supplier
Once you’ve found a supplier that works for your company, make sure to maintain a positive working relationship with them. Although the shortage will place pressure on the supply chain and the manufacturing process, your supplier will do all they can to find solutions. Make sure you keep up constant communication, share your data and plan together.